EXHIBIT 10.56
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
C/O JML Optical Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
May 1, 1995
Delta Computec Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
This letter will confirm the understanding which I have reached with Delta
Computec Inc. ("Delta") and with Delta Data Net, Inc. ("Data Net", and
collectively with Delta, the "Borrower") relating to the assistance requested of
me by the Borrower regarding the Borrower's need to fund overadvances of the
Borrower's credit line with its commercial lender, National Canada Finance
Corporation (the "Lender"). The Credit Agreement between the Borrower and the
Lender, as originally executed and as amended from time to time, is referred to
as the "Credit Agreement"). The Credit Agreement is also guaranteed by
SAI/Delta, Inc., a Florida corporation, and a wholly-owned subsidiary of Delta.
Pursuant to the annexed letter agreement dated May 1, 1995, between the
Borrower and the Lender relating to payment of overadvances (the "Overadvance
Facility", as defined in the letter agreement dated May 1, 1995, between
Borrower and Lender), the undersigned, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ ("▇▇▇▇▇▇▇") is
prepared to pay amounts to be used by the Borrower solely for the purpose of
repaying advances made, or to be made, pursuant to the Overadvance Facility up
to a maximum amount of $400,000.00. The amount of ▇▇▇▇▇▇▇'▇ commitment to repay
the Overadvance Facility as it exists from time to time is referred to as the
"▇▇▇▇▇▇▇ Commitment".
▇▇▇▇▇▇▇ is willing to make the ▇▇▇▇▇▇▇ Commitment payments on the
following terms and conditions:
1. As of the date of this letter agreement, ▇▇▇▇▇▇▇ is providing the
Borrower with ▇▇▇▇▇▇▇'▇ personal check in the amount of $400,000.00 representing
the initial amount of the ▇▇▇▇▇▇▇ Commitment to the Overadvance Facility which
is being utilized by the Borrower as of May 1, 1995.
2. Payments made to Borrower pursuant to the ▇▇▇▇▇▇▇ Commitment shall be
used only with respect to the Overadvance Facility.
3. If, during the period that the ▇▇▇▇▇▇▇ Commitment is outstanding, the
Borrower requires additional advances pursuant to the ▇▇▇▇▇▇▇ Commitment, the
Borrower agrees to provide ▇▇▇▇▇▇▇ with written notice of any such
additional requirements. Notice shall be sent to ▇▇▇▇▇▇▇'▇ attention,
and to the attention of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, by FAX at the following FAX
Number: (▇▇▇) ▇▇▇-▇▇▇▇. Both ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇▇ shall each also be
notified by telephone at (▇▇▇) ▇▇▇-▇▇▇▇ at the earliest possible time that it
becomes apparent that an additional payment will be required pursuant to the
▇▇▇▇▇▇▇ Commitment.
4. Upon receipt of a FAX transmission as set forth in paragraph 3
hereof, ▇▇▇▇▇▇▇ shall cause funds, up to the maximum amount of the ▇▇▇▇▇▇▇
Commitment of $400,000, to be transmitted by wire transfer from ▇▇▇▇▇▇▇'▇
personal account at M & T Bank in Rochester, New York, directly to the
Borrower's account maintained by the Lender.
5. To the extent that a recalculation of the Borrower's Borrowing Base
(as defined in the Credit Agreement), results in a determination that all or a
portion of the Overadvance Facility can be repaid, the Borrower agrees to
forward to ▇▇▇▇▇▇▇ a check for the portion of the Overadvance Facility which the
Borrower is repaying to ▇▇▇▇▇▇▇ as aresult of the recalculated Borrowing Base.
6. The Borrower agrees to pay ▇▇▇▇▇▇▇ interest on the amount of the
▇▇▇▇▇▇▇ Commitment actually outstanding at the same rate of interest paid to the
Lender pursuant to the Credit Agreement. At the end of each calendar month, the
Borrower will calculate the amount of its interest obligation relative to the
outstanding amount of the ▇▇▇▇▇▇▇ Commitment during that month, and will forward
to ▇▇▇▇▇▇▇ a wire transfer orcheck (at ▇▇▇▇▇▇▇'▇ choice) for such amount of
interest.
7. ▇▇▇▇▇▇▇ agrees to provide funds for the ▇▇▇▇▇▇▇ Commitment through
April 30, 1996. Borrower agrees to repay the full outstanding balance of the
▇▇▇▇▇▇▇ Commitment,together will all interest and any other charges, no later
than April 30, 1996.
8. As consideration for ▇▇▇▇▇▇▇ agreeing to perform his obligations to
repay the Borrower's Overadvance Facility pursuant to this letter agreement,
Delta agrees to issueto ▇▇▇▇▇▇▇ an option to purchase all authorized
uncommitted, but unissued common shares of Delta as they exist on the date of
this letter agreement. Following an exercise of the option and such issuance,
it is estimated that ▇▇▇▇▇▇▇'▇ fully exercised interest inDelta (assuming
conversion of the subordinated debenture ▇▇▇▇▇▇▇ holds and including security
holdings of all related persons) shall be approximately 77.99 percent of the
20,000,000 authorized common shares of Delta. Subject to reconfirmation, it is
anticipated that the option will grant a right to purchase from Delta 11,440,475
common shares constituting the remaining authorized but unissued common shares
of Delta less shares reserved for various stock option plans which remain
unexercised. The final amount of the common shares to be covered by the option
as consideration for the ▇▇▇▇▇▇▇ Commitment (collectively, the "Overadvance
Facility Shares"), will be determined by ▇▇▇▇ ▇▇▇▇▇▇▇, a director of the
Borrower and a member of the Stock Option Committee of Delta's Board of
Directors. A copy of the Option Agreement is annexed hereto.
9. It is understood and agreed that the option and the Overdraft
Facility Shares to be issued will be restricted securities under the Securities
Act of 1933, as amended (the "1933 Act"), and that the option and the Overdraft
Facility Shares will not be registered under the 1933 Act, or any relevant state
laws, but are being issued pursuant to an exemption from such registrations and
that the Borrower's reliance upon such exemptions is predicated in part on
▇▇▇▇▇▇▇'▇ representations.
10. ▇▇▇▇▇▇▇ represents and acknowledges that he is an "Accredited
Investor" as defined in Rule 144 of the General Rules and Regulations under the
Securities Act of 1933, as amended; that he has knowledge and experience in
financial and business matters and in investing in securities of the type
covered by this letter agreement and in making advances similar to the ▇▇▇▇▇▇▇
Commitment, such that he is capable of evaluating the merits and risks of the
prospective ▇▇▇▇▇▇▇ Commitment; that he has knowledge of the affairs of the
Borrower satisfactory to him to enable him to make the investment represented by
the securities covered by this letter agreement; that he is aware of the high
risk entailed in making the ▇▇▇▇▇▇▇ Commitment; that he is a sophisticated
investor with sufficient knowledge and assets to make the ▇▇▇▇▇▇▇ Commitment;
and that he believes that the commitment to make the ▇▇▇▇▇▇▇ Commitment and the
receipt therefor of the option to purchase the Overdraft Facility Shares is a
suitable investment for him based on his investment objectives and financial
needs.
11. ▇▇▇▇▇▇▇ represents that he is a bona fide resident of the State of
New York, and that the option, and if exercised, the Overdraft Facility Shares
are being acquired by him in his own name solely for his own beneficial interest
and not as nominee for, or on behalf of,of for the beneficial interest of, or
with the intention to transfer the option or the Overdraft Facility Shares to,
any other person, trust, or organization.
If this letter agreement accurately reflects our understanding, kindly
execute and return one copy for my files.
Very truly yours,
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
ACCEPTED AND AGREED TO:
DELTA COMPUTEC, INC., DELTA DATA NET, INC.,
SAI/DELTA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, President
DELTA COMPUTEC INC.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
May 1, 1995
National Canada Finance Corporation
Suite ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Gentlemen:
Re: Overadvance Facility
This letter will set forth the terms and conditions of the understanding
reached between Delta Computec Inc. ("DCI") and Delta Data Net, Inc. ("DDI"),
both New York State corporations with offices for the conduct of business at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (collectively, "Borrower"), and
with SAI/Delta, Inc. ("SAI/Delta"), a Florida corporation, which is a guarantor
of the obligations of the Borrower, and National Canada Finance Corporation, a
Delaware corporation with an office at Suite ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Tower, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("Lender").
Borrower and Lender are parties to a Credit Agreement dated April 1, 1994,
which has subsequently been amended by three amendments thereto (which
agreement, as amended by all three amendments, is referred to as the "Credit
Agreement"). The terms set forth in this letter agreement, unless otherwise
defined herein, shall have the same meaning as the terms set forth in the Credit
Agreement.
Borrower has advised Lender that it requires an increase of advances under
the Credit Agreement to permit Borrower to borrow amounts in excess of the
amount which would otherwise be available to Borrower pursuant to the Borrowing
Base set forth in the Credit Agreement. At the present time, the Borrower
calculates that it will require a loan or advance of at least an additional
$400,000 over the permitted Borrowing Base. To the extent that the amount of
the advances or loans exceed the Borrowing Base, such amounts are referred to
as, collectively, an "Overadvance Facility".
Borrower has advised the Lender that it has obtained the commitment of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇ ("▇▇▇▇▇▇▇"), an officer, director, controlling shareholder
and holder of an existing subordinated debenture of the Borrower, to repay the
first $400,000 of the Overadvance Facility as it exists from time to time. A
copy of the commitment letter of ▇▇▇▇▇▇▇ to the Borrower confirming the
obligation of ▇▇▇▇▇▇▇ is annexed hereto as Exhibit A. To the extent that the
Lender advises the Borrower of the need to have the Overadvance Facility paid by
▇▇▇▇▇▇▇, the Borrower agrees to notify ▇▇▇▇▇▇▇ and to cause ▇▇▇▇▇▇▇ to provide
funds to the Borrower's account which it maintains with the Lender to pay the
amount of the Overadvance Facility up to $400,000. ▇▇▇▇▇▇▇'▇ commitment to
provide the Borrower with these additional funds up to $400,000 is referred to
as the "▇▇▇▇▇▇▇ Commitment".
Lender has also agreed with Borrower that Lender will, to the extent that
▇▇▇▇▇▇▇ has agreed to provide payment of the Overadvance Facility, provide the
Borrower with a further Overadvance of three dollars for every four dollars as
to which ▇▇▇▇▇▇▇ has paid the Overadvance Facility. The maximum amount of the
Overadvance Facility which the Lender will be required to pay will be $300,000,
which, when added to the ▇▇▇▇▇▇▇ Commitment portion, will grant to the Borrower
a total Overadvance Facility of $700,000.
Lender agrees that if the amount of the Overadvance Facility which has
been paid by ▇▇▇▇▇▇▇ is the only portion of the Overadvance Facility which is
outstanding at any given time, then, at the time that the Borrowing Base is
increased over the amount borrowed by the Borrower, such that the Overadvance
Facility requirements of the Borrower decrease, then ▇▇▇▇▇▇▇ shall be repaid
first any and all amounts as to which the Overadvance Facility has been paid by
▇▇▇▇▇▇▇. The means whereby ▇▇▇▇▇▇▇ will increase the amount of his payment of
the Overadvance Facility, and whereby ▇▇▇▇▇▇▇ will be repaid for any of his
payments of the Overadvance Facility, are each as set forth in Exhibit A.
Lender agrees that it will not provide any portion of the Overadvance
Facility to Borrower without providing notice thereof to Borrower and to
▇▇▇▇▇▇▇.
In the event that Lender ever provides any portion of the Overadvance
Facilities at the time that ▇▇▇▇▇▇▇ is also providing repayment of a portion of
the Overadvance Facility, any repayment of the Overadvance Facility shall be
repaid to ▇▇▇▇▇▇▇ and to Lender in proportion to the amount which each is
paying of the Overadvance Facility.
If this letter accurately reflects our understanding, kindly execute and
return one copy.
Very truly yours,
DELTA COMPUTEC INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, President
DELTA DATA NET, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, President
SAI / DELTA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, President
ACCEPTED AND AGREED TO:
NATIONAL CANADA FINANCE CORPORATION
By:_______________________________________
,Vice President
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
C/O JML Optical Industries, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
May 4, 1995
Mr. ▇▇▇▇ ▇▇▇▇▇▇, President
Delta Computec Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Dear ▇▇▇▇:
I spoke this afternoon with ▇▇▇▇ ▇▇▇▇▇, Chairman of ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.,
Delta's second largest shareholder. After discussing my option with ▇▇. ▇▇▇▇▇,
I have decided to revise the Option Agreement to provide that if, prior to May
20, 1996, the core business of Delta, representing essentially the service
business (and not including the business conducted by Data Net, Data Span or
Intronet) is sold, I am prepared, at the option of the Board of Directors of
Delta, either to cancel the option agreement (if the option is unexercised) or
to resell to Delta any common shares which I have received upon exercise of the
option for a refund of the exercise price (if the option has been exercised),
provided that I receive, no later than the closing on any such sale of the core
business, payment in full of the $400,000 which I have advanced to Delta (and
its affiliated companies), plus all interest and a $100,000 additional payment.
If this is acceptable to the Board of Directors of Delta, kindly execute
and return one copy of this letter which shall constitute an amendment to the
option agreement.
Very truly yours,
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
Accepted and agreed to:
DELTA COMPUTEC INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, President
